Economic crisis closing price gap between U.S., European winter holidays

Three years ago, this blog pointed out that, adjusted for inflation, overseas air travel had become cheaper than ever. For example, had Trans-Canada Air Lines’ 1956 Montreal-London $416 round-trip seat sale fare kept up with inflation, it would have risen to $3,244 by 2007.

Air Canada’s latest Montreal-London seat sale price: $994, including taxes, fees, charges and surcharges.

After all these years, the perception still lingers that a long-haul trip across the Atlantic must be vastly more expensive than a shorter trip within North America.

Perhaps this was true many years ago, when airfares were regulated by governments and normally set on a per-mile basis. Thus, one would have expected to pay about two and a half times as much to fly from Winnipeg to Vancouver as to fly to Saskatoon, given that Vancouver is 1,162 miles from Winnipeg while Saskatoon is only 440 miles away.

Deregulation changed all that. Airlines were free to set prices according to supply and demand. The result is that it is now routinely cheaper to fly to Vancouver than it is to fly to much-closer Saskatoon.

Overseas fares remain higher than domestic fares on an absolute basis, but have come down drastically on a per-mile basis. While a typical seat sale fare to Toronto might come out to about 25 cents per mile traveled, long-haul seat sale fares are more likely to be in the 10 to 15-cent range.

Those higher overseas fares are now being offset, however, by the impact that Europe’s devastating economic crisis has had on tourism, not to mention the strong Canadian dollar.

The drop in demand for hotel rooms that were added en masse in the ’90s and the 2000s has been so serious that it is not uncommon for a four-star hotel usually overlooked by price-sensitive tourists to cost less per night than a three-star hotel, and that the resulting discounts are bringing the air-plus-hotel cost of traveling to southern Europe down to levels competitive with traveling to the U.S.

Consider, for instance, the air-plus-hotel cost of two adults traveling to the following cities and sharing a room at a four-star hotel, arriving at the destination on Feb. 6, 2013 and returning to Winnipeg on Feb. 13, 2013.

For the increasingly common solo traveler, who only needs to pay one airfare instead of two but pays a premium for accommodation, the discounting means that it is actually less expensive to go to Europe than it is to go just across the border to the United States. The exception here is Las Vegas where the casinos offer cheap rooms to draw you to the slot machines and card tables.

If you limit yourself to a comfortable, but more basic three-star property (think CanadInns or Holiday Inn), the gap widens a bit in the U.S.A’s favour, although even here the additional cost of going to southern Europe instead of the U.S. is only about $400 for the solo traveler and about $950 for a couple.


Sources for graphs:

Nice: Pierre & Vacances Residence Heliotel Marine; Air Canada
Lisbon: NH Campo Grande Hotel; Air Canada
Madrid: Praga Hotel; Air Canada
Barcelona: Husa Via Barcelona Hotel; KLM
Rome: Raganelli Hotel; Air Canada
Los Angeles: The Westin Los Angeles Airport; Air Canada
Palm Springs: Marriott’s Shadow Ridge II- The Enclaves; Air Canada
Las Vegas: Rio All-Suite Hotel & Casino; United Airlines
Orlando: Sheraton Lake Buena Vista Resort; Delta Air Lines
Miami: Sofitel Miami; Delta Air Lines

Amadeus and Expedia also used to find fare and hotel information. Less convenient flights, such as early morning departures or flights with long layovers en route, might be less expensive than those shown here.


About theviewfromseven
A lone wolf and a bit of a contrarian who sometimes has something to share.

One Response to Economic crisis closing price gap between U.S., European winter holidays

  1. Sean Carter says:

    Thanks for such great info! The chats really lay it out. I have also read some interesting things from Ian Mausner on this topic. He was able to predict the outcome of the European economic crisis so you know he has a strong grasp on this subject

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